Abstract

Abstract Some social institutions reveal participants’ behavior in the aggregate, while concealing the identities of the participants. For example, individual church donations may be kept anonymous, while the total amount raised is publicized. This presents a puzzle in light of recent evidence that anonymity reduces contributions. We offer an explanation for this puzzle in the context of a model of costly signaling with two types of agents: conditionally cooperative (“good”) and uncooperative (“bad”). We consider costly participation in a community activity (e.g., tithing) as a signal of an individual's type. By signaling the presence of one more good type, this may lead other good types to contribute more in future, more important, collective goods problems (CGP's). Thus, if good types also value others’ contributions more than bad types, good types gain more from sending the signal. But if those who do not signal face exclusion, the signal would need to be made very costly to dissuade bad types from signaling. In contrast, if the institution is anonymous, so that it reveals only the total number of signals, then while signals cannot be used to exclude bad types, even an inexpensive signal may succeed in revealing the total number of good types. This information helps good types maximize the conditional cooperation component of their utility in the CGP, and under specified conditions, can increase expected CGP contributions. We characterize conditions under which an anonymous signaling institution increases expected welfare. We provide examples of institutions that may yield such benefits, including religion, music and dance, voting, charitable donations, and military traditions.

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